Today’s legal service market creates a true imperative for change. As a result of factors discussed in earlier blog posts, over time the market will not see this change as merely desirable, it will regard it as mandatory.
Clients Demand More for Less
The imperative starts with corporate clients. The pressure they are under to reduce spending will be focused as intensely on legal spend as any other. Procurement departments are commonly involved in decisions concerning legal expenses. Market data shows that clients are paying less per unit of value delivered. The pressure to deliver quality legal service for lower fees is part of a new reality.
Legal Service Readily Can Be Delivered Better, Faster, and Cheaper
The market knows that legal service can be delivered less expensively, at no sacrifice to quality.
Law firms certainly can do so. The traditional law firm business model is manifestly inefficient. The way resources are assembled and deployed—from staffing models, to space management, to engagement management—create significant opportunities for efficiencies and positive change, even without new tools and methods.
And then there are the new tools and methods. Technology and process design have created new ways of approaching legal service that enable it to be done better, faster, and cheaper. Literally. The best outcome for law firms and others most commonly will involve a combination of lawyers, other professionals, and technology.
Law firms will embrace the new tools and methods in different ways and on different timetables. Nearly all will talk about it, and most will make some changes. It remains to be seen how many will be truly innovative in addressing the effectiveness of their delivery model.
New Entrants Will Drive Market Change
Whatever law firms do, the demanded innovation will be provided by new entrants to legal service, new businesses entering the market to respond to its imperative. With increasing support of venture capital and other financial sources, they offer the market alternatives, including innovative delivery systems enabled by technology, more efficient processes, flexible and less expensive—yet qualified—talent sources, and entire new approaches to legal service. While the pace of adoption has been uneven, they are progressively gaining traction.
The new entrants create a market-changing set of options for clients. Clients can choose to rely more on new entrants to work in collaboration with their law departments. Clients can disaggregate engagements, sending parts to new entrants, including in some cases the bulk of the cost of the engagement. Clients can turn to law firms they would not formerly have selected to lead complex engagements, supported by new entrant resources. Clients can increasingly choose law firms based on efficient service delivery, as more of them adapt to the imperative for change. Clients will become increasingly adept at making the most of these diverse options over time, becoming less and less willing to accept the slower and more expensive traditional alternatives.
Ultimately, the very structure of the market for legal service will change. New entrants will gain substantial market share and credibility. Law firms will respond to the resulting loss of market share by accelerating their change. Some will do it soon and well enough; others will not. The resulting market will consist of a different lineup of participants, some incumbent, some new, all of whom have responded effectively to the market demand.
In the end the imperative for change will be met.